Don’t forget to check into your state probate laws as some life insurance payouts could end up in the estate…
https://www.thebalance.com/are-life-insurance-death-benefits-subject-to-estate-tax-4012617
IxnayBob, is that a universal “no”?
I have yet to read a post on Bogleheads from a reputable poster that is in favor of universal life, whole life, or any of the equity indexed life policies. I think it’s a universal No.
Occasionally, in determining whether and how to get out of a policy already paid for some number of years, there is debate about whether one should cut their losses or whether it might be worth it to keep it. But, if you are being offered one of those policies, the universal answer is to run the other way. It’s usually an “affinity” sale; someone in your church, your difficult to keep a job brother in law, etc.
I guess the other thing people agree on is time shares.
Very interesting on long term care policies tied in with insurance. I had given up on long term care insurance for myself, but may look into a continuing care community at some point.
Due to my kids language skills, they take me traveling, or have as the tail end of abroad experiences. D and now SIL organizes, guides and I pay for meals and lodging. Works just fine and is a bargain for me in terms of international travel as we stay in modest lodging but have interesting experiences.
Sorry, have to call BS on this FUD (fear, uncertainty, dread). I know lots of advisors, and asked someone who knows even more of them than I do. Between us, we have never heard of any Errors and Omissions claims for an advisor who was acting reasonably who lost an E&O claim. This is America, and any sad sack can file a claim, but perhaps you could point me to some claims that held up.
Beneficiary complaints don’t count. Shame on an advisor who makes recommendations based on fear of what a beneficiary might claim. Their job is to do right by their client.
" there is debate about whether one should cut their losses or whether it might be worth it to keep it" - We’ve kept ours since the cash value growth is about what we’d get in other investments. But… I anticipate cashout as we age more and premium component eats more into the growth.
The only life insurance we have is thru work. 9x salaries. I need to look if there is a term limit and what happen when we retired. All these posts make me wonder…
^^healthy individuals can almost always get a better price by searching the internet than purchasing extra term thru their employers. Plus, a non-employer policy is portable.
@rickle1
you wrote -"some of the newer life policies (mainly permananet but some term) include riders that pay for LTC benefits. "
Do you have names of companies that still offer both and are solvent? Many Insurance co’s with LTC policies stopped issuing new LTC policies in the past few years because of rising overall financial liabilities due to those very policies.
@Shawbridge , The 2 of you spent
with three replacement knees?? That’s amazing! We went hiking for 4 days in Japan with all original equipment and it wore me out! Even slightly injured my knee. I just sucked it up and soldiered on… picked up a walking stick. My wife enjoyed the hiking but felt one day was enough for her. (LOL!)
@NJres, my wife’s knees were new and she felt great. Mine was still original equipment and I was really in some pain. But, next year, I’m assuming I will hike with no problems. I graduated from PT today and he was pretty confident I’d have no problem hiking or cycling. The thing I’m concerned about is having enough flexion for sculling.
We each use two hiking poles that I think are spring-loaded so there is a little bounce. The brand we use is Black Diamond, I think. They really help knees.
@menloparkmom - Yes many (perhaps most) of the carriers that offered “stand alone” LTC coverage have discontinued those product lines as they became way too costly. GE actually has been in a major financial quagmire because of their insurance arm, mainly because of LTC losses.
The policies I’m talking about are actually life insurance contracts that offer LTC living benefits (don’t have to die to win). They’re traditionally underwritten and simply offer a portion of the death benefit during life specifically for LTC needs. So not the extra strain on the carriers as they would have paid out the benefits anyway. Many major carriers have these. We primarily use the big boys like Lincoln FInancial, AIG, Transamerica, etc. They fall under the category of Chronic and Critical Illness riders. Talk to an independent agent or financial advisor who has access to an independent insurance platform and they can give you more specifics.
@shawbridge I hope the tips are padded. This new trend, clanking tips of walking poles, scratches on the trails, is driving me up the wall.
@iglooo, I think you can put different kinds of tips on. The basic tip is like a metal point, so no. But you can put on a rubber cover, which is probably good when the trail is rocky whereas the metal tip is more useful when the trail has dirt.
We stopped all the insurance when kiddo turned 18. Neither of us wants to fund any incentive from our deaths. 
@conmama We have LTC policies, and were concerned about forgetting to pay in older age. Auto payments make sense. We were also given the choice to add a secondary contact (relative, trustee, financial planner, etc.) who would be notified if we fail to pay a premium on time, but within the grace period.
A relative of ours had the unfortunate experience of needing LTC. He too had a LTC policy, but about a year before it became obvious, he stopped paying the premiums. When contacted, the company said they tried to convince him to keep it. (Yeah, right).
My brothers and I paid / pay for my parents (dad has since passed) LTC policies. They couldn’t afford a policy and we didn’t want them to be forced into a medicaid facility so we split the cost (for the past 20 yrs). Dad had his policy for 10 or so yrs before he passed without needing care (died of cancer quickly). Mom still has her plan going.
I wish these newer polciies existed back then as Dad would have been a great example of not needing to “use it or lose it”. Today his coverage would have been realized in a death benefit which would have helped my mom. Instead it was premium down the drain for 10+yrs. That’s a major reason folks don’t buy LTC coverage. They think it will be wasted premium dollars. The new programs make it far more attractive.
I’m not in favor of insurance policies for investment unless it confers useful tax savings or unless there are medical or other issues like @CountingDown has described. The insurance that hides fees that in the case of ETFs or mutual funds would be much more easily visible. So my no is not universal per @IxnayBob, but my sentiment runs in the same direction as his.
We had a whole life policy (I think) inside a 412i Defined Benefit Plan that morphed into a 415i DBP. I would not have purchased a Whole Life Plan but when the 412i plan was concocted, I think by insurance industry lobbyists, it enabled a much higher level of tax-deferred saving than I could get any other way. I think the policy had an effective guaranteed annual return of 5% within the life insurance component. When I maxed out on the amount that could be saved in a DBP, we rolled it all into a 401(k) but the 401(k) could not hold an insurance policy, so I cashed it out. I wouldn’t have purchased such a policy except for the tax benefits
I have term insurance as well from 20 years ago that expires this year. I don’t see why I would want any insurance now. My wife, who is not financially savvy and is somewhat risk averse as a result, was convinced by our FA that we didn’t need insurance. In her mind, she will move back to the 1000 sf live/work art studio that we bought 30 years ago if I die first and her expense level will go way down.
When I had an interest in a hedge fund management company, I came across a way to have my interests in the hedge fund held in an insurance policy. This eliminated lots of short-term capital gains tax. Structured properly, I think one can use insurance policies to eliminate some tax, in which case, it might be worth paying the embedded fees. I’m not an expert in this, but if I used an Irrevocable Life Insurance Trust to buy a policy with variable life (I think that is the name for a policy whose value could be largely correlated with the market), my heirs might get a death benefit that grew without income tax and that does not incur an estate tax. Does that sound right?
^ You’re describing a Private Placement VUL contract which can literally own just about anything, gold, art work, etc. Generally for accredited investors and other HNW folks. That’s consistent with the profile of a business owner with a 412i (it’s now “e”). That’s actually the tax code for a fully insured defined benefit plan and is a great way for a small business to take major write offs (like a couple hundred k per yr vs the typical 401k). You’re correct though when you unwind the plan, you must roll into an IRA or 401k.
Thanks @rickle1, I do have a business and was able to save $200K+ a year. Unfortunately no one told me about the cap until I was pretty close to it and had to hustle to avoid problems. The Private Placement VUL was the vehicle I had identified. Both the 412i (I think 412i was abused and targeted by the IRS so I was advised to switch to a 415i) and the VUL are places where the tax advantages of insurance make a lot of sense.